The standard instrument is a uniform percentage. The number comes down, it gets divided evenly across every function, and each leader is told to find their share. It is defended as fair, fast, and simple to administer, and it is the most reliably destructive tool in the cost reduction kit. It works on exactly one assumption, which is never true: that every function is carrying the same proportion of unnecessary cost.
Bain’s research on companies that ran major cost programs found that among those going after reductions of twenty percent or more, close to sixty percent conceded that the effort had failed, and that more than half of respondents had set their targets as round internal numbers without testing them against market data or externally defined performance. The round number and the even split are the same habit. What follows is the case against it, put as the objections I actually get when I say this in a room.
Is it not fairer to ask everyone for the same percentage?
It is the opposite of fair, and the people in the room usually know it within about ten minutes. Fairness would mean each function surrenders a similar proportion of the cost it is carrying that buys nothing. A uniform percentage instead asks each function to surrender the same proportion of its total, which means the function that has been managed tightly for five years gives up capability while the function nobody has examined clears its target out of slack it did not know it had.
Follow what that teaches. The leader who has been disciplined is now cutting into things that matter, knows it, and cannot say so without sounding like they are refusing the target. The leader who padded is fine, and has just learned that padding is the correct strategy going into the next cycle. You have not only taken the wrong cost out of the business, you have systematically rewarded the behavior that created the problem, and you will pay for that lesson in every budget cycle that follows.
There is a version of this that is genuinely fair and it takes more work: allocate the target by where the unnecessary cost actually is. That requires knowing where it is, which requires somebody to do the analysis, which is precisely the work the uniform percentage exists to avoid. The percentage is not a fairness instrument. It is a substitute for a decision.
What if I do not know where the unnecessary cost is?
Then find out, because that is a three to six week problem, not a structural constraint. The objection is honest and it is the real reason this instrument survives, but the analysis required is smaller than most executives assume. Actual profitability by product and customer with full cost attribution, a twelve month view of every recurring payment, and a comparison of each function’s cost against what it delivers rather than against last year’s budget. Three workstreams, a small team, well inside a quarter.
Weigh that against what the uniform cut costs you. If it removes capability from your best-run functions, you do not get that back cheaply, and you will be buying it from outside at market rates inside two years. A six week delay to allocate the target properly is not slow. It is the cheapest insurance available on a decision you cannot easily reverse.
The other half of the answer is uncomfortable: if nobody in the business can say where the unnecessary cost sits, that is itself the finding. It means the management information has been built to satisfy reporting rather than to support decisions, and the cost program is about to be run blind whatever instrument you choose. Fix that first and the target allocates itself.
Does it not at least hit the number?
It hits the reported number and misses the run rate, which is why the second round exists. This is the pattern anyone who has lived through one recognizes. Round one is announced and delivered on paper. Two quarters later the savings have not appeared in the actual cost base, because work that was genuinely necessary has resurfaced as overtime, contractors, expedited freight, and vendor invoices coded somewhere nobody is watching. So round two is called. Then round three.
Each round is smaller and more damaging than the one before it, because the easy money went first and the organization is now cutting into bone while its best people update their resumes. By round three nobody believes anything leadership says about the future, which has a cost that will never appear in a savings report but shows up clearly in what you can execute for the next two years.
The arithmetic is not close. One properly sequenced program at a larger number, delivered permanently, beats three uniform rounds that each report success. The problem is that the first option requires a harder conversation in month one and the second option defers that conversation until it has become somebody else’s.
One more consequence, and it is the one that survives longest. A uniform cut is a public statement about how the company makes decisions, and every manager in the building reads it correctly. It says that leadership either cannot tell the difference between a well-run function and a badly-run one, or can tell and has chosen not to act on it. Neither reading is good, and both of them change how people behave for years afterward. Budgets get built defensively. Genuine efficiency stops being reported, because reporting it only makes you a smaller target that is easier to cut. The information you would need to allocate the next target properly is exactly the information the last uniform cut taught everybody to stop volunteering.
Are there situations where across-the-board is the right call?
Two, and they are narrower than the people who reach for this instrument would like. The first is a genuine liquidity event, where the constraint is cash this month rather than cost this year. In that situation speed dominates precision, you take reduction wherever it is fastest, and you accept that you are damaging the structure and will rebuild it later. That is triage. It should be named as triage rather than dressed as a cost program, because the two require completely different follow-up.
The second is a genuinely uniform cost base: a business where every function is roughly the same size, does roughly the same kind of work, and has been through the same management discipline for the same length of time. In a manufacturer with plants of different ages, functions of different maturity, and a commercial organization assembled through acquisition, that condition does not hold. It is worth checking rather than assuming, but I have not often found it.
Outside those two cases, the instrument is being chosen for administrative convenience, and the price of that convenience is paid by whichever part of your business has been managed best.
What should I do instead?
Set the target at the enterprise, allocate it by evidence, and require every function to defend its line with specifics. The target does not get divided. It gets assigned against where the analysis says the unnecessary cost sits, which will mean some functions carry twenty five percent and others carry nothing at all. That asymmetry is the point, and it needs to be stated up front or it will be read as favoritism.
The rule that makes it work is a defense standard rather than a number. Any function that can explain, with specifics, what each cost buys and what breaks if it goes, keeps its money. Any function that cannot, loses it. This changes the incentive from protecting budget to understanding it, and it produces a second-order benefit worth more than the savings: at the end you have a management team that can account for its own cost base, which most cannot.
The reason organizations keep reaching for the uniform percentage despite knowing all of this is rarely ignorance. It is structural, and the diagnostic I use for it is the Stagnation Genome, which identifies the underlying traits that keep a business defaulting to the same instrument no matter how many times it fails. Businesses that cut across the board twice have almost always got a third round coming, and the trait that produced the first two is still fully intact.
Bain’s account of what the companies that kept their savings did differently is worth reading in full: Sustained cost transformation. The pattern they describe, targets set against external evidence rather than internal round numbers, is the same argument arrived at from the outside.
About the Stagnation Assassin
Todd Hagopian is a Fortune 500 transformation executive who has generated $3B in shareholder value across Berkshire Hathaway, Illinois Tool Works, Whirlpool, and JBT Marel, where he serves as Global VP of Product Strategy and Marketing. Known as The Stagnation Assassin, he is the author of two published books: The Unfair Advantage: Weaponizing the Hypomanic Toolbox and Stagnation Assassin: The Anti-Consultant Manifesto. His blog is published in 15+ languages and read by operators worldwide. Bring him to your stage via his speaking page or connect with him on LinkedIn.
If your business has already run two across-the-board rounds, the useful question is not where to find a third. It is what keeps producing the reflex. That is what Stagnation Genome scoring is built to answer, and it is free. Request a score here.
See also: Where Should You Cut Costs First?